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Europe one of few bright spots in Sybase results

by Stuart Lauchlan in Silicon Valley

Europe proved to be the bright spot for Sybase in in an otherwise grim set of full year results which mean more job cuts for the troubled relational database supplier.

The California-based software firm was forced to recalculate its 1997 figures following last week's discovery that the company's Japanese management had inaccurately recorded revenues during the year.

For the year, Sybase posted a loss of $55.4 million against a loss of $79 million last year. Revenues were down $1 billion from last year to $903.9 million.

As well as Japan, the domestic US market performed under par with only a 25 per cent growth rate in Europe brightening the overall gloom.

Sybase made a fourth quarter net loss of $25.5 million against profits of $5 million for the comparable period last year. Revenues for the quarter were $223.2 million, down from $267.8 million a year ago.

Mitchell Kertzman, Sybase chief executive, said the results meant that the company would go out of the current quarter with fewer employees, although he did not specify where the job cuts would fall. "We expect to take whatever actions we're going to take in the first quarter," he said. "Following those actions, we should be at a run rate of both revenues and expenses that would assure profitability."

Reflecting a wider industry decline in database licence growth, server revenue was down 19 per cent from the fourth quarter last year and down 17 per cent from this year's third quarter. Sybase's Powersoft tools division saw its fourth quarter revenue fall 30 per cent year on year, but rise 12 per cent from the third quarter of this year.

For the full year, licensing revenues fell by 31 per cent to $110.5 million, alhthough services revenue rose by seven per cent to top $112.7 million. Kertzman said he wants to see licence revenue stepped up to become 60 per cent of the total figure.

Revenues for the first three quarters of the year were readjusted downward by $43 million in the wake of the Japanese incident. The main impact of this was that the small profits reported in all three quarters became losses of $6.2 million, $17.8 million, and $6 million respectively.

Meanwhile, the legal vultures have begun to swoop with two law firms filing securities class action fraud suits against Sybase and its senior management, accusing them of falsely promoting the idea that the company was in turnaround, and of insider trading.

Elsewhere, the stock price of Sybase's arch rival Oracle rose dramatically after chief executive Larry Ellison talked up the company's prospects at an investors' conference in San Francisco.

Kertzman appeared to take Ellison's predictions of a 25 per cent increase in database sales with some scepticism. "The advantage of being a billionaire is that you can afford the kind of crystal balls that the rest of us cannot," he joked.